Monday, UK's largest house builder Persimmon plc (PSN.L) announced that it expects selling price to weaken 10% for the second half of 2008, based on the continuing trend of price falls. Sales conditions remain extremely competitive, while incentives and marketing costs are increasing leading to further margin pressures. During the first-half, the company experienced selling price weakness of 5%.
The company expects to legally complete 10,000 homes for the year ending December 31, 2008. Persimmon said that its sales revenues for the year-to-date period, including legal completions are £1.8 billion with a further £250 million of sales already taken for 2009.
According to the company, the uncertainty created in the housing market by the increasingly turbulent and uncertain outlook in financial markets has had a negative impact on all its regions across the UK. The cancellation rates have increased to 35% over recent weeks due to market uncertainties, the company said.
Riding a tight ship, Persimmon said it is concentrating on increasing social housing sales volumes. This year, the company is expecting to increase the volumes by 25%.
The company revealed that with planned cash generation it expects its borrowings to reduce during the second half. The company remains optimistic that its debt will reduce further during 2009.
Persimmon warned that it does not expect to see any improvement in trading conditions until the mortgage availability is increased to 2007 levels.
Preliminary results for the current year are slated for release on March 3, 2009.
On the London Stock Exchange, PSN.L is down 7.94% trading at 200 pence a share on a volume of 21,891 shares.
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